If you were expecting a cryptocurrency from the European Central Bank (ECB) anytime soon, then just sit back and relax, for nothing of the sorts is planned by them in the near future.
The ECB is the central bank for the euro-zone, which is in charge of implementing monetary legislation and upholding the euro’s stability. In short, the ECB is responsible for the euro. So, if anyone is to introduce a central EU digital currency, it’s them.
In response to a query in his letter the ECB’s president Mario Draghi told the European Parliament that the Central Bank needs the technology that digital currencies are based upon to develop still more than it has before they will deem crypto fit for implementation.
The president of ECB acknowledges the benefits that crypto could bring to the table, such as digitalizing the economy, and widening monetary policy, however, Draghi has concerns regarding the “implications for the degree of intermediation and leverage in the banking system, which is important for the role of banks in financing the real economy.”
Furthermore, Draghi continues to point out the reasons why ECB believes that the technology is not yet ripe for the needs of the central bank, since it is not ready to get mixed up in individual household and company accounts, which might imply entering “into competition for retail deposits with the banking sector,” that potentially could harm the ECB. Additionally, Draghi notes that there doesn’t appear to be any immediate need for the central bank to issue its own crypto, since the demand for euro is on the uprise, and “cash remains a popular means of payment.” And, continuous the ECB president, there are already many crypto options on the market permitting digital transactions to be almost as fast as cash transactions.
It could be that digital currency is a problematic topic for banks in general since a portion of the bank’s income is derived from using the money that they store for investing purposes. However, this is not as straightforward with digital currencies because of their blockchain nature, all transaction are recorded, which means full transparency and the requirement of private keys for any transaction that is to be committed. However, banks are still displaying their interest in crypto and investing in it, since it like any exchange, it is a way of making money through speculation on the market.